(Legal Newsline) — The Department of Justice announced Jan. 17 that Deutsche
Bank has agreed to a $7.2 billion settlement after allegations it misled investors
in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed
securities (RMBS) between 2006 and 2007.
resolution holds Deutsche Bank accountable for its illegal conduct and
irresponsible lending practices, which caused serious and lasting damage to
investors and the American public,” said then-U.S. Attorney General Loretta E.
Lynch. “Deutsche Bank did not merely mislead investors. It contributed
directly to an international financial crisis. The cost of this misconduct is
significant: Deutsche Bank will pay a $3.1 billion civil penalty, and provide
an additional $4.1 billion in relief to homeowners, borrowers and communities
harmed by its practices.”
to allegations, Deutsche Bank misled investors by representing to them that its
RMBS fell in line with the proper underwriting guidelines. The department says Deutsche Bank admitted to revising the guidelines so that loans
could be underwritten to anyone with “half a pulse.” The bank also purportedly
covered up that it did no reviews to ensure borrowers had proper
capability to repay loans.
billion resolution – the largest of its kind – recognizes the immense breadth
of Deutsche Bank’s unlawful scheme by demanding a painful penalty from the
bank, along with billions of dollars of relief to the communities and
homeowners that continue to struggle because of Wall Street’s greed,” said
principal deputy associate attorney general Bill Baer.